January 2, 2012

As house values fall, why don't taxes?

Whether a property owner is paying his or her fair share can be in the eye of the beholder, leading many Mainers to challenge their property assessments.

By Kelley Bouchard kbouchard@pressherald.com
Staff Writer

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Aaron Amirault bought this Falmouth home last January for nearly $100,000 below the town’s assessed property value. He challenged the assessment and it was decreased, shaving $478 off his tax bill. “I’m not against paying my fair share,” Amirault said. “I just want it to be based on the real value of my property.”

John Ewing/Staff Photographer

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In September 2010, 10 homes in Falmouth sold for an average $423,000, with an average assessment of $427,000. That produced an assessment ratio of 101 percent, meaning that assessments were, on average, 1 percent above selling price.

A year later, 12 homes sold in September for an average $461,000, with an average assessment of $455,000. That produced an assessment ratio of 99 percent, meaning assessments were, on average, 1 percent below selling price.

PROCESS PRIMARILY SUBJECTIVE

Gregory and other assessors say they strive to make sure assessments are accurate and equitable so municipal taxes are divided fairly among property owners.

In truth, assessing remains a largely subjective process despite advances in technology, including geographic information systems and real estate appraisal software. Better building materials may have no impact on assessments. A slight waterfront view can boost a home's value beyond reason.

Maine Revenue Services provides minimal oversight given state laws that set market-related assessment standards but impose few or no penalities. As a result, some municipalities view the standards as guidelines rather than requirements.

While the state's Property Tax Division encourages munipalities to do regular townwide revaluations to keep assessments current, the process can cost more than $300,000 and take one to two years to complete.

As a result, many towns now make incremental adjustments or do in-house revaluations. Special software allows assessors to keep track of sales and building permits, make changes to individual property assessments and adjust values on similar properties accordingly.

That's the strategy Rick Mace takes as town assessor in York, which has an assessment ratio of 100 percent and a quality rating of 8. The average selling price for a house in York this year was $445,611, and the average assessed value was $436,648.

It takes about two months for Mace and his staff to update assessments on about 10,600 properties each year. This year, 900 properties increased in value, 4,217 stayed the same and 5,485 fell in value. Some assessments dropped as little as $100; a few increased $100,000 or more.

"Every year, there's a handful of the same people who come in and question their assessments," Mace said. "It's like a game for some of them. I take the time to meet with each of them, because sometimes assessors make mistakes."

These days, Mace sees more people seeking assessment increases because they want the town's value to match a higher selling price. It rarely works in their favor. One property owner asked him to increase a $500,000 assessment on a house that was listed on the market for $750,000.

"When I went out to look at the property, I had to reduce it even more," Mace said. "He wasn't too happy with me."

COMMERCIAL PROPERTY A CHALLENGE

Elizabeth Sawyer, the assessor in South Portland and Westbrook, recently met with a resident of an upscale South Portland neighborhood who wanted her to reduce his $700,000 assessment because a house next door recently sold for $500,000.

"He's convinced the whole street should be reduced because of that one sale," Sawyer said. "One of our biggest challenges now is educating people about the market."

Sawyer said there are sane real estate transactions, when houses sell for pretty much what they're worth. Then there are foreclosures, shortsales and other transactions where the sellers are forced or willing to let properties go for a lot less than they're really worth.

To keep up with market forces, Sawyer made across-the-board reductions in 2009, by 5 percent in South Portland and by 10 percent in Westbrook; she followed with a 10 percent reduction in South Portland's land values in 2010.

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